HBOS and BHP drag on the market

The excitement in mining group BHP Billiton has - almost inevitably - dimmed again. To recap, yesterday BHP shares added 4.6% in late trading on talk that China was planning to take a stake in the business through the steel company Baosteel.

The idea, it appeared, would be to try and scupper BHP's plan to merge with Rio Tinto. To that end, the Chinese have already taken a stake in Rio.

However this morning BHP has dipped 32p to £17.30 after Reuters reported a source close to Baosteel playing down the tale. However the original report, in the Australian newspaper, did suggest the Chinese had not decided which company might take the stake.

Elsewhere the market has edged lower, with the FTSE 100 down 13.8 points at 5976.4.

Who would be an investor in banking group HBOS, which is leading the fallers at the moment? Bear raids, credit crunch and mortgage market worries - HBOS has suffered them all and more.

Now its shares are down 22p at 527.5p after Credit Suisse analysts downgraded from neutral to underperform and slashed their target price from 890p to 565p. Advising clients to avoid UK banks, they said on HBOS specifically: "We expect continued volatility in shares, with central bank driven rallies (e.g. interest rates and liquidity action) interspersed with economy driven sell-offs. For us, the latter is more important through the potential damage on profits and capital into the downturn."